In May, FinanceAsia named the winners of its annual Country Awards for Achievement. Last month, winners were given ther awards at our annual awards dinner in Hong Kong. Today, we continue presenting the rationale for our decisions with a look at Malaysia.
Best Bank, Best Investment Bank, Best DCM House: CIMB Investment Bank
As always these were all highly competitive categories, mainly due to a small number of deals in both equities and debt. But dealmakers from CIMB were able to defy the lukewarm market conditions, bringing deals to market that continued to whet investors’ appetite for growth companies. CIMB, the nation’s second-largest lender by assets, sealed its position as FinanceAsia’s top Malaysia bank with another strong all-round performance.
Healthier economic conditions undoubtedly helped as loans and deposits grew. But CIMB’s overall return on equity rose to 8.3% in December last year from 7.3% a year earlier, thanks to its ongoing restructuring efforts to bring down its cost base. The group’s 4.5% increase in annual net earnings was partly offset by an increase in impairment losses on loans made in Singapore and Thailand, but the overall tier 1 ratio improved by 40 basis points to 13.1% over the year.
Following the years of political scandal surrounding 1MDB, the Malaysian economy expanded beyond expectations in the first quarter of 2017, which it is hoped will help bring back foreign capital. According to central bank data, foreign investors withdrew at least $14 billion (RM60 billion) from Malaysia’s bond markets between November 2016 and March 2017.
Known for its strong debt franchise, CIMB led and marketed four of the five largest debt offerings during our review period, including a $1.55 billion global sukuk by the sovereign and $1.2 billion-worth of ringgit-denominated bond by DanaInfra Nasional, the financing arm of the country’s subway operator.
During our award period, CIMB underwrote $12.9 worth of local bonds, representing a 23% market share. Closest rival Maybank sold $11.4 billion of ringgit-denominated bonds for a 21% market share.
In ECM, CIMB focused on arranging mid-size follow-up transactions in the midst of an IPO drought, usually partnering up with a foreign bank. The Malaysian bank joined forces with Macquarie in Khazanah’s stake sale of Tenaga in September, raising $289 million from the sell-down of the utility company for the sovereign wealth fund, Dealogic data shows. In the same month, it teamed up with Deutsche Bank in MBK Healthcare’s sell-down of IHH Healthcare, raising $247 million through the block trade.
With the support of its parent bank’s strong corporate relationships, CIMB Investment Bank has also made a push into advisory businesses, representing mostly Malaysia corporates and government-linked units. That included Employees Provident Fund’s 40% stake purchase of Konsortium Lebuhraya Utara-Timur, a toll-road operator, and AirAsia’s 16.7% new shares sale to Tune Air.
Best ECM House, Best Broker: Maybank Investment Bank
Maybank, Malaysia’s largest lender by assets, scoops the country’s Best ECM and Best Broker awards this year thanks to its strong origination and execution capacity in the country’s stock market.
According to Dealogic, Maybank was ranked first in the ECM league table during our review period, underwriting $1.17 billion across 11 deals. One major factor behind the bank’s position in the league table was its sole bookrunner role in Sime Darby’s share placement in October 2016, which raised $572 million for the palm oil company, the largest ECM transaction during our review period.
It also partnered with fellow Malaysian banks on property developer Eco World International’s $580 million listing in March, effectively reopening the country’s IPO market after a fairly lukewarm listing market which saw a total of 11 IPOs raising just $214 million in 2016.
As a broker, Maybank has invested in its research and offers its clients candid insight on the country’s economy and on local industrial trends. The research teams currently cover more than 113 companies in the region, up slightly from 110 in 2016.
Besides its home market, it also has offices elsewhere in Southeast Asia, Hong Kong, the US, and UK, providing corporate access and seamless execution services for investors across the globe.
Best International Bank: Citi
Citi is FinanceAsia’s pick for Best Foreign Bank in Malaysia because the bank continues to deepen its penetration of the market at a time when other major rivals face major setbacks.
The bank reported a 7% increase in pre-tax profit to RM806 million in the 12 months to December 2016, over which period its larger rival HSBC posted a 8% decline in earnings. This performance was boosted by Citi’s higher trading income and revenue from cash management and by a rise in personal loans.
Its overall foreign-exchange business ranked fifth in the 2016 league table compiled by the Malaysian central bank, up from seventh a year earlier. And in the secondary bond market in Malaysia it swept up into pole position from sixth, overtaking the likes of HSBC and CIMB.
More surprisingly, Citi’s rose to the top of the secondary sukuk bond market from sixth the previous year, according to Bank of Negara Malaysia’s May 2017 report. According to its latest financial results, net income from Islamic banking rose 50% year on year to RM59 million in December last year.
In its commercial banking business, the bank brought in a total of 52 new banking clients last year and plans to attract another 75 this year, taking advantage of the weaknesses among its peers.
As a result of the strong operating
performance in the past 12 months, its profitability, measured by return on equity, rose to 17.4% in 2016 from 16.7%, while its tier-1 capital ratio improved to 15.9% from 14.4%.
Citi has also diversified its business, expanding into consumer lending through the use of mobile technology. According to Citi, 60% of its customers in Malaysia are digitally connected now via mobile applications or through its website, a trend Citi plans to support with more resources.
Best International Investment Bank: Deutsche Bank
Since establishing its presence in Malaysia in 1967, Deutsche Bank has long been a strong contender in the domestic capital markets, linking growth opportunities to foreign capital. Employing about 220 staff in Malaysia, the bank stood out this year because of its strong universal banking franchise across different asset classes.
During our review period, the bank was the largest foreign bookrunner in the ECM and equity-linked league table, primarily helping state-owned Khazanah to sell shares in large secondary block deals.
Deutsche has been helping Khazanah to raise funds from the sale of its stock holdings through exchange bonds or block trades since 2012, managing all of its six recent deals. In the review period, Khazanah raised $201 million from the sell-down of its stake in UHH Healthcare in June 2016 and a $399 million exchangeable sukuk into Beijing Enterprise Water Group. Deutsche was a bookrunner on both deals.
On the debt side, it was a joint bookrunner on Maybank’s $500 million tier 2 bond in April 2016, the first bank in Malaysia to issue a US dollar-denominated Basel III-compliant print.
